I talk to dentists every day. Really nice people that tend to have a variety of successes, as well as a few challenges. Thankfully, we have been able to help almost every one of them. One of the strange things I have seen is an almost commonplace situation where doctors don’t really know where they are right now. The “where” that I am talking about is the nitty-gritty numbers of business. I mean, what are the results that are memorialized on a spread sheet, in a CPA’s GAAP documents (Profit & Loss Statement, Balance Sheet, etc.) and discussed and understood by the doctor and everyone on the team? What are the numbers on the practice score card? How do they make decisions without adequate knowledge of how they are doing? There is not a game or business ever created that doesn’t need a way to keep score.
The Forced Change that I want to discuss today costs nothing, is simple to compile, but takes patience and consistency to help everyone in the office understand the impact and importance that these numbers wield. You and your team need to understand why these numbers affect your day-to-day delivery of dentistry. They define how you are doing and, in knowing this, you and your team will change your attitudes and actions to improve these numbers. You can’t manage what you don’t measure. By omission, any office that does not follow the right numbers will doom themselves to mediocrity. If you are sitting there about to stop reading, you probably are that doctor that feels like they aren’t really into tracking numbers. You could look them up, but pretend that you don’t have the time. Just way too busy for that stuff. If this is the case, please stop reading. This is not the article, or even the author you should pay attention to. You have already defined your future by not being engaged in the present. Read and reflect on what I am about to say. It is simple in construction and profound in its statement and truth:
THE REASON PEOPLE FAIL IS BECAUSE THEY GIVE UP ON WHAT THEY WANT MOST FOR WHAT THEY WANT NOW.
Done properly, this list of numbers will create a total change in your bottom line. Every member of the team will know how they are doing and what they can do to influence their pay, their stress level, and real fulfilment in their jobs. Not too long ago I wrote an article about the important numbers you should be following in your practice. This time I will abbreviate the presentation by giving you an easy tool that you are welcome to modify and use as a scorecard to super charge your results. This short list of what you need to track will create a “forced change” because it will place the most important benchmarks of a successful practice tangibly in your hands and the hands and minds of your team. It will create a synergism of adaptation to improve each and every number you currently have into a number that will ensure that you are consistently moving towards excellence in business and practice.
To ensure that this works, there are a few have-to-do things to put into place.
- Must have the numbers available any day of every week, not months later. In other words, you have to set up your production and spending numbers in a format that allows you “any time” access. No more waiting on a lazy CPA or outdated format of seeing your Profit & Loss Statements 30 or 90 days after the month is over. We want “actionable” numbers at least weekly. We need to see the data at a point in the month where we can work on altering a poor trend or below optimal numbers. Most doctors operate their finances like a car you drive that only lets you see the speed or gas level every 60 days. Good chance you will either run into something bad or run out of gas before you realize you are in the middle of nowhere.
- These numbers need to be posted where everyone on the team will see them daily. A “top of the mind awareness strategy”. What gets measured, gets done. You can’t mange what you don’t measure.
- At least once a month, you need to discuss and celebrate your wins and areas of improvement. The improvement from “forced change” needs to always be acknowledged and have an incentive tied to improved results. Keep in mind that with forced change, many of your team (and maybe you) will not realize the ripple effect of the “forced change” strategy. It is an action that stimulates change in areas that are not directly associated with the strategy. That is the brilliance of “forced change”. It shakes up stale systems and attitudes by replacing them with engagement, leading to improved results.
- These numbers, as well as the format you use, has to be easy to read, easy to understand, easy to diagnose where you are, and easy to act on improving your results. Bar graphs, Profit & Loss Statements, Balance Sheets, etc., won’t cut it. We need something that is condensed from these areas, but formatted to be easier to read, quicker to assess, and easy to compare with your goal. An instant snapshot of the health, goals, and benchmarks of a successful dental practice.
- Note that the formatted “Income & Expense Summary” has the numbers and data monthly, but also has them year to date. This is your score sheet, now take it and change your practice results.
Michael Abernathy DDS
972.523.4660 cell
[email protected]
PS. I want to ask a favor and also fuss at you at the same time. That is my cell number and if you call, I will be the one who answers. Too many of you have not taken advantage of this opportunity. Calling me is not an admission of failure, it is a desire to improve or get more clarity in something I have said or some challenge you face. Not calling is a sign of reluctance or fear that should not be there. If you have a suggestion, question, or complaint, give me a call. I look forward to getting your calls, texts, and emails.
INCOME & EXPENSE SUMMARY
COLLECTIONS__________ PRODUCTION_________ YEAR TO DATE__________
MONTH YEAR TO DATE IDEAL GOAL
EMPLOYEE COSTS: ________ _________ 27%-28%
FACILITY COSTS: ________ _________ 7%-9%
DENTAL SUPPLIES: ________ _________ 5%-6%
MARKETING: ________ _________ 3%-5%
LAB: ________ _________ 8%-10%
OFFICE SUPPLIES: ________ _________ LESS THAN 2%
TOTAL EXPENSES: _________ YEAR TO DATE 52%-60%
COLLECTION %: _______ _________ 100%+
PRODUCTION/EMP./MONTH: _______ _________ $20,000-$25,000
PRODUCTION/OP/MONTH: _______ _________ $25,000-$30,00
NEW PATIENTS: ________ _________ 40-60NP/DOCTOR
DIRECT REFERRALS: ________ _________ 50%+
HYGIENE % /MONTH: ______ _________ 33%+
PRODUCTON/NEW PATIENT: ________ _________ $2,500 PLUS
What is 1% of a year’s collections in your practice: ______________.